Liechtenstein

Liechtenstein exists because a very rich family wanted a vote. Everything that followed, including the wealth, is downstream of that peculiar beginning.

The House of Liechtenstein was one of the great landowning families of the Habsburg lands, wealthy enough by the seventeenth century to be conspicuous, but with a problem: all its estates were held in fief from other lords, which meant it could not sit in the Imperial Diet. A seat required territory held directly from the Emperor. So the family went shopping, buying the lordship of Schellenberg in 1699 and the county of Vaduz in 1712, two poor and mountainous scraps whose only real attraction was their status. In 1719 the Emperor Charles the Sixth united them and raised them to a principality bearing the family's name. It is entirely characteristic that no reigning prince set foot in the country for well over a century after its creation.

The Holy Roman Empire collapsed in 1806 and Liechtenstein, alone among the hundreds of small imperial states, came out the other side sovereign, having been included in Napoleon's Confederation of the Rhine and then the German Confederation. It disbanded its army in 1868 on grounds of cost, having last sent a detachment to war in 1866, and has had none since. It remained tied to Austria-Hungary until that empire's defeat in 1918 ruined the principality's finances, at which point it turned decisively to Switzerland, adopting the Swiss franc in 1920 and entering a customs union in 1923 that persists to this day, with Switzerland also representing Liechtenstein's interests abroad in many matters.

The country was neutral in both world wars and was not invaded. Prince Franz Josef the Second, who reigned from 1938 to 1989, was the first prince to make Liechtenstein his actual residence, moving in as the Anschluss made Vienna untenable. At the war's end the principality granted asylum to several hundred soldiers of a Russian anti-Soviet unit who had crossed the border, refusing to hand them over to the Soviet Union, an episode that a number of larger countries did not match.

Liechtenstein is a constitutional monarchy with a directly elected parliament, the Landtag, and it is an outlier in one respect: its monarch retains real power. Following a constitutional referendum in 2003, approved by about two thirds of voters and criticised by the Council of Europe's Venice Commission, the prince can veto legislation, dismiss the government, and appoint judges; the same amendment also, in an unusual balance, gave citizens the right to abolish the monarchy by referendum. A 2012 referendum to strip the prince of his veto over popular votes was rejected by roughly three quarters of voters after he indicated the family would withdraw from politics if it passed.

Hans-Adam the Second has been prince since 1989 and formally remains head of state, though he handed day-to-day powers to his son, Hereditary Prince Alois, as regent in 2004. The government is led by a prime minister; Brigitte Haas took office in 2025 as the first woman to hold the post. Liechtenstein also has strong direct democracy on the Swiss model, with citizens able to initiate and reject legislation. Women did not receive the vote in national elections until 1984, later than anywhere else in Europe, and then only at the third attempt.

Liechtenstein covers 160 square kilometres, making it the fourth smallest country in Europe, and it is one of only two doubly landlocked states in the world, surrounded entirely by landlocked neighbours; the other is Uzbekistan. Its western third is the flat floodplain of the Rhine, which forms the whole Swiss border and carries the country's towns, farmland, and industry. Eastward the land rises abruptly into the Ratikon Alps, reaching 2,599 metres at the Grauspitz, and it is in these mountains that Malbun, the country's only ski resort, sits.

The Rhine has been the shaping force. Repeated flooding damaged the valley until the river was straightened and embanked in the nineteenth and twentieth centuries, work that made the modern valley floor usable. About a third of the country is forested. There is no airport, and the only rail line is a short stretch of Austrian track with a handful of stops, so Liechtenstein is reached by road or by bus from the Swiss station across the river.

Liechtenstein has among the highest incomes per head anywhere, and, unusually for a microstate, the larger part of it does not come from banking. The country has a substantial and highly specialised industrial base: Hilti, the construction tool manufacturer, Ivoclar in dental materials, Thyssenkrupp Presta in steering systems, and Neutrik in audio connectors are all Liechtenstein firms of genuine global scale. Industry employs more people than finance, and the country registers a very high number of patents per head.

Financial services are nonetheless significant, built historically on banking secrecy, low taxes, and the Anstalt, a flexible corporate form that made the principality attractive for holding assets discreetly. That model came under sustained international pressure, culminating in a 2008 affair in which stolen data from a Liechtenstein bank exposed large-scale tax evasion by German and other clients. The country responded by signing information-exchange agreements, adopting international transparency standards, and repositioning itself as a compliant jurisdiction, and it has since been removed from the relevant blacklists. Liechtenstein is in the European Economic Area but not the European Union, and it uses the Swiss franc. More people commute into the country to work each day than there are Liechtenstein citizens.

The flag of Liechtenstein has two horizontal bands of blue over red, with a golden crown in the upper hoist. The blue is said to represent the sky and the red the glow of evening fires, while the crown stands for the prince, the princely house, and the unity of the people with their monarch. The crown was famously added in 1937 after it was discovered, at the Olympic Games, that Liechtenstein's flag was identical to that of Haiti, a coincidence the crown was introduced to resolve.

Liechtenstein is a predominantly Roman Catholic country, and Catholicism is the established state religion, reflecting the principality's deep historical ties to Catholic Austria. The faith is woven into the culture, the festivals, and the calendar of the small nation, and its churches are a familiar part of the landscape. There are smaller Protestant and other communities, including a Muslim minority among immigrant residents, and the country guarantees religious freedom, but its Catholic heritage and the formal place of the Church remain a defining feature of national life.

The cuisine of Liechtenstein closely resembles that of its Alpine, German-speaking neighbours, Switzerland and Austria, with hearty, warming dishes suited to a mountain climate. A national favourite is käsknöpfle, soft cheese-coated dumplings or noodles, often served with applesauce, a relative of the Swiss and Austrian cheese-and-dumpling traditions. Soups, dishes of pork and dumplings, and Alpine cheeses feature strongly, and Austrian-style pastries and cakes are popular for dessert. The food is rustic, comforting, and firmly rooted in the wider culinary world of the central Alps.

Agriculture once dominated the economy of what was a poor rural principality, and although it now plays only a small role, it retains a place in the country's life. The fertile Rhine valley floor supports the growing of maize, vegetables, and other crops, while the Alpine slopes are used for raising cattle and dairy farming, and wine is produced, including from vineyards associated with the princely house. The modern economy, however, rests overwhelmingly on financial services and on a remarkably strong high-precision manufacturing sector for so small a state.

Liechtenstein's culture is Alemannic and Alpine, closely related to that of eastern Switzerland and the Austrian Vorarlberg, with brass bands, marksmen's clubs, and yodelling societies filling the social calendar of the eleven municipalities. The national day, 15 August, is the one occasion on which the entire country is invited into the castle grounds for a drink with the prince, an arrangement that would be unmanageable almost anywhere else.

The princely house holds one of the world's most important private art collections, assembled over four centuries and including major Rubens holdings, parts of which are shown in Vienna and Vaduz. The country also has a long and slightly comic association with postage stamps, which in the mid-twentieth century were a significant source of state revenue and remain a collector's speciality. Its football team plays in European qualifying groups and loses to much larger nations with a regularity that has become a national joke, though the club side Vaduz competes in the Swiss league. The football stadium seats more people than several of the country's villages hold.

Liechtenstein has a population of around 40,000, among the smallest of any country, of whom roughly two thirds are citizens; the remainder are resident foreigners, chiefly Swiss, Austrian, German, and Italian. Naturalisation is notably difficult, requiring long residence and, in the ordinary route, approval by a vote of the applicant's municipality. German is official and everyone speaks an Alemannic dialect closely related to Swiss German.

The population lives in a string of villages and small towns along the Rhine valley. Vaduz, the capital, holds only around 5,000 people and is not the largest settlement; Schaan is. The most striking demographic fact is the daily inflow: more than half the workforce commutes in from Switzerland and Austria each morning, so the number of people in the country during working hours substantially exceeds the number who live there.